BusinessWeek: Why housing could fall 25%

[HLS]

YES, you were “lucky” along with millions of others, but most people don’t see it as luck, but now an entitlement to easy street.

Just because there have been 9 cycles, doesn’t guarantee that there will be a 10th.

The psychology of people thinking that it has to happen can actually make it happen, but if that same psychology turns, it won’t happen. If psychology turns in the stock market, watch out below.

Houses are cheaper than they were 2 and 3 years ago. Mortgage rates are lower than they were 2 and 3 years ago,
actual payments are less than they were 2 and 3 years ago, SO where are the buyers ??

It’s a bargain now compared to 2 and 3 years ago, but the psychology has changed 180 degrees, and people who are smart are concerned, and those that aren’t concerned don’t understand what is happening.

Where are all the genius “investors” who went to seminars and bought books and tapes on RE investing ?
Since prices are cheaper now, the market should be booming, but it’s not.

The party is over, but some people are just arriving, thinking that they aren’t too late and there is more fun to come.

The band has packed up, the liquor bottles are empty, there is trash all over the place. There’s a mess that needs to be cleaned up.

Anybody who buys a house today is helping to clean up that mess and saving somebody else the trouble.

[HLS]

KEV,
I’m not sure how old you are or how long you’ve been around So Cal RE, but you are right on.

The ONLY reason that the housing bubble inflated was that the govt “allowed” 100% stated income financing.
They allowed it because it was “good for the economy”
We would probably have gone into a depression after the dot com crash and 9-11 if rates hadn’t been lowered

It wasn’t Greenspan, and it wasn’t the low interest rates, it was NO DOWN payments to anyone with a pulse.

We are headed back to a situation where you need a 10% down payment, and low interest rates. When the prices get back down to reality the markets will stabilize.

The financing in 2002-2006 was stupid.
The house prices between 2002-2006 became stupid.

You cannot have stupid market prices without stupid financing, and the stupid financing is gone FOREVER.

[HLS]

KEV,
I’m not sure how old you are or how long you’ve been around So Cal RE, but you are right on.

The ONLY reason that the housing bubble inflated was that the govt “allowed” 100% stated income financing.
They allowed it because it was “good for the economy”
We would probably have gone into a depression after the dot com crash and 9-11 if rates hadn’t been lowered

It wasn’t Greenspan, and it wasn’t the low interest rates, it was NO DOWN payments to anyone with a pulse.

We are headed back to a situation where you need a 10% down payment, and low interest rates. When the prices get back down to reality the markets will stabilize.

The financing in 2002-2006 was stupid.
The house prices between 2002-2006 became stupid.

You cannot have stupid market prices without stupid financing, and the stupid financing is gone FOREVER.

[HLS]

KEV,
I’m not sure how old you are or how long you’ve been around So Cal RE, but you are right on.

The ONLY reason that the housing bubble inflated was that the govt “allowed” 100% stated income financing.
They allowed it because it was “good for the economy”
We would probably have gone into a depression after the dot com crash and 9-11 if rates hadn’t been lowered

It wasn’t Greenspan, and it wasn’t the low interest rates, it was NO DOWN payments to anyone with a pulse.

We are headed back to a situation where you need a 10% down payment, and low interest rates. When the prices get back down to reality the markets will stabilize.

The financing in 2002-2006 was stupid.
The house prices between 2002-2006 became stupid.

You cannot have stupid market prices without stupid financing, and the stupid financing is gone FOREVER.

[HLS]

KEV,
I’m not sure how old you are or how long you’ve been around So Cal RE, but you are right on.

The ONLY reason that the housing bubble inflated was that the govt “allowed” 100% stated income financing.
They allowed it because it was “good for the economy”
We would probably have gone into a depression after the dot com crash and 9-11 if rates hadn’t been lowered

It wasn’t Greenspan, and it wasn’t the low interest rates, it was NO DOWN payments to anyone with a pulse.

We are headed back to a situation where you need a 10% down payment, and low interest rates. When the prices get back down to reality the markets will stabilize.

The financing in 2002-2006 was stupid.
The house prices between 2002-2006 became stupid.

You cannot have stupid market prices without stupid financing, and the stupid financing is gone FOREVER.

[HLS]

KEV,
I’m not sure how old you are or how long you’ve been around So Cal RE, but you are right on.

The ONLY reason that the housing bubble inflated was that the govt “allowed” 100% stated income financing.
They allowed it because it was “good for the economy”
We would probably have gone into a depression after the dot com crash and 9-11 if rates hadn’t been lowered

It wasn’t Greenspan, and it wasn’t the low interest rates, it was NO DOWN payments to anyone with a pulse.

We are headed back to a situation where you need a 10% down payment, and low interest rates. When the prices get back down to reality the markets will stabilize.

The financing in 2002-2006 was stupid.
The house prices between 2002-2006 became stupid.

You cannot have stupid market prices without stupid financing, and the stupid financing is gone FOREVER.

[patientlywaiting]

Also consider the Baby Boomers who are retiring and facing enormous medical bills. They will have to sell and scale back.

There’s a WSJ article on “Why Baby Boomers May Bust the Housing Market.”
http://blogs.wsj.com/developments/2008/01/16/why-baby-boomers-may-bust-the-housing-market/

[patientlywaiting]

Also consider the Baby Boomers who are retiring and facing enormous medical bills. They will have to sell and scale back.

There’s a WSJ article on “Why Baby Boomers May Bust the Housing Market.”
http://blogs.wsj.com/developments/2008/01/16/why-baby-boomers-may-bust-the-housing-market/

[patientlywaiting]

Also consider the Baby Boomers who are retiring and facing enormous medical bills. They will have to sell and scale back.

There’s a WSJ article on “Why Baby Boomers May Bust the Housing Market.”
http://blogs.wsj.com/developments/2008/01/16/why-baby-boomers-may-bust-the-housing-market/

[patientlywaiting]

Also consider the Baby Boomers who are retiring and facing enormous medical bills. They will have to sell and scale back.

There’s a WSJ article on “Why Baby Boomers May Bust the Housing Market.”
http://blogs.wsj.com/developments/2008/01/16/why-baby-boomers-may-bust-the-housing-market/

[patientlywaiting]

Also consider the Baby Boomers who are retiring and facing enormous medical bills. They will have to sell and scale back.

There’s a WSJ article on “Why Baby Boomers May Bust the Housing Market.”
http://blogs.wsj.com/developments/2008/01/16/why-baby-boomers-may-bust-the-housing-market/

[jpinpb]

The real estate cycle is difficult for me to understand. HLS says the psychology of people has a hand in this. If that’s the case, then the lowering of interest rates and raising of jumbo loans and tax rebates should instill confidence in buyers and w/in the next few months, people may go shopping again, would stand to reason.

HLS says, “Anybody who buys a house today is helping to clean up that mess and saving somebody else the trouble.”

Then what’s to stop that from continuing? The next group saves people and on and on.

I’m ok w/prices coming down b/c I would like to buy a house again. I didn’t want to do it w/trick loans, although now I’m kicking myself for not gambling, since it was free money and the gov. is willing to intervene to save people and banks.

It’s frustrating. I’m trying to do the right thing and not go in over my head and think of the future and the rules are being changed and no one is really playing fair.

Why wouldn’t we have another cycle? What are the reasons that wouldn’t happen. I don’t think we are entitled. I work hard to achieve goals.

Why is it ridiculous to think rich businessmen or foreigners are buying places in San Diego? Irvine company has done that w/apartments and our dollar is so weak compared to the Euro, foreigners can very easily buy places here.

Just scared b/c I don’t want a McMansion. I just want a little place I can call my own and it seems to be so out of reach no matter our hard I try.

If the interest rate is lowered and jumbo loan limit increased and government backing Fannie and Freddie Mac, then why say loose lending is no more. Sounds incredible that they would be so foolish to give money away again, but it almost seems like that’s where they’re heading.

I understand cost of living is going up. I already thought that would impact the economy when in the last several years the price per barrel of oil shot from 50 to $100. And yet, the price of homes continued to rise.

[jpinpb]

The real estate cycle is difficult for me to understand. HLS says the psychology of people has a hand in this. If that’s the case, then the lowering of interest rates and raising of jumbo loans and tax rebates should instill confidence in buyers and w/in the next few months, people may go shopping again, would stand to reason.

HLS says, “Anybody who buys a house today is helping to clean up that mess and saving somebody else the trouble.”

Then what’s to stop that from continuing? The next group saves people and on and on.

I’m ok w/prices coming down b/c I would like to buy a house again. I didn’t want to do it w/trick loans, although now I’m kicking myself for not gambling, since it was free money and the gov. is willing to intervene to save people and banks.

It’s frustrating. I’m trying to do the right thing and not go in over my head and think of the future and the rules are being changed and no one is really playing fair.

Why wouldn’t we have another cycle? What are the reasons that wouldn’t happen. I don’t think we are entitled. I work hard to achieve goals.

Why is it ridiculous to think rich businessmen or foreigners are buying places in San Diego? Irvine company has done that w/apartments and our dollar is so weak compared to the Euro, foreigners can very easily buy places here.

Just scared b/c I don’t want a McMansion. I just want a little place I can call my own and it seems to be so out of reach no matter our hard I try.

If the interest rate is lowered and jumbo loan limit increased and government backing Fannie and Freddie Mac, then why say loose lending is no more. Sounds incredible that they would be so foolish to give money away again, but it almost seems like that’s where they’re heading.

I understand cost of living is going up. I already thought that would impact the economy when in the last several years the price per barrel of oil shot from 50 to $100. And yet, the price of homes continued to rise.

[jpinpb]

The real estate cycle is difficult for me to understand. HLS says the psychology of people has a hand in this. If that’s the case, then the lowering of interest rates and raising of jumbo loans and tax rebates should instill confidence in buyers and w/in the next few months, people may go shopping again, would stand to reason.

HLS says, “Anybody who buys a house today is helping to clean up that mess and saving somebody else the trouble.”

Then what’s to stop that from continuing? The next group saves people and on and on.

I’m ok w/prices coming down b/c I would like to buy a house again. I didn’t want to do it w/trick loans, although now I’m kicking myself for not gambling, since it was free money and the gov. is willing to intervene to save people and banks.

It’s frustrating. I’m trying to do the right thing and not go in over my head and think of the future and the rules are being changed and no one is really playing fair.

Why wouldn’t we have another cycle? What are the reasons that wouldn’t happen. I don’t think we are entitled. I work hard to achieve goals.

Why is it ridiculous to think rich businessmen or foreigners are buying places in San Diego? Irvine company has done that w/apartments and our dollar is so weak compared to the Euro, foreigners can very easily buy places here.

Just scared b/c I don’t want a McMansion. I just want a little place I can call my own and it seems to be so out of reach no matter our hard I try.

If the interest rate is lowered and jumbo loan limit increased and government backing Fannie and Freddie Mac, then why say loose lending is no more. Sounds incredible that they would be so foolish to give money away again, but it almost seems like that’s where they’re heading.

I understand cost of living is going up. I already thought that would impact the economy when in the last several years the price per barrel of oil shot from 50 to $100. And yet, the price of homes continued to rise.

[jpinpb]

The real estate cycle is difficult for me to understand. HLS says the psychology of people has a hand in this. If that’s the case, then the lowering of interest rates and raising of jumbo loans and tax rebates should instill confidence in buyers and w/in the next few months, people may go shopping again, would stand to reason.

HLS says, “Anybody who buys a house today is helping to clean up that mess and saving somebody else the trouble.”

Then what’s to stop that from continuing? The next group saves people and on and on.

I’m ok w/prices coming down b/c I would like to buy a house again. I didn’t want to do it w/trick loans, although now I’m kicking myself for not gambling, since it was free money and the gov. is willing to intervene to save people and banks.

It’s frustrating. I’m trying to do the right thing and not go in over my head and think of the future and the rules are being changed and no one is really playing fair.

Why wouldn’t we have another cycle? What are the reasons that wouldn’t happen. I don’t think we are entitled. I work hard to achieve goals.

Why is it ridiculous to think rich businessmen or foreigners are buying places in San Diego? Irvine company has done that w/apartments and our dollar is so weak compared to the Euro, foreigners can very easily buy places here.

Just scared b/c I don’t want a McMansion. I just want a little place I can call my own and it seems to be so out of reach no matter our hard I try.

If the interest rate is lowered and jumbo loan limit increased and government backing Fannie and Freddie Mac, then why say loose lending is no more. Sounds incredible that they would be so foolish to give money away again, but it almost seems like that’s where they’re heading.

I understand cost of living is going up. I already thought that would impact the economy when in the last several years the price per barrel of oil shot from 50 to $100. And yet, the price of homes continued to rise.

[Author]

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